(0:30) - Building A Strong Retirement Portfolio: How Much Do You Need?
(12:45) - Where Should You Invest For Long Term Investments?
(25:40) - Episode Roundup: BAC, SHW, NVDA, BRK.B, VOO
Podast@Zacks.com
Welcome to Episode #340 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Recently, the Wall Street Journal ran an article called “Here’s What a $5 Million Retirement Looks like in America.” In the article, it highlighted 5 couples and singletons who had substantial investment portfolios, over $1 million, and several had over $4 million portfolios. That’s impressive. They are rich.
How’d they do it?
None of those in the article were best selling novelists, movie stars, or professional athletes. That makes it seem even more obtainable for you and I. If they can do it, why not us?
Lessons from Rich Retirees
Those featured in the article seemingly had similar paths they followed to achieve this incredible wealth. This included,
1. They started investing early
2. They maxed out their 401ks
3. They invested in equities, both individual stocks and index funds. You don’t have to get fancy.
Keep it Simple
The stocks listed in the article were big caps that you and I could also own. When Tracey has talked with her friend Ed, another rich retiree with a million-dollar stock portfolio, he too owned basic, large cap stocks, many of which paid dividends.
None were IPOs or a small cap stock that was largely unknown to most investors. These rich investors had kept it simple.
1. Bank of America (BAC Quick QuoteBAC - Free Report)
Warren Buffett has owned Bank of America in the Berkshire Hathaway portfolio for years. It’s up 108.3% over the last 10 years, but that’s underperforming the S&P 500 which is up 170% during that same time.
Bank of America pays an attractive dividend again, however, now yielding 3%, which gives long-term investors even more firepower for compounding.
Should value investors be considering a bank like Bank of America again?
2. The Sherwin-Williams Company (SHW Quick QuoteSHW - Free Report)
Sherwin-Williams rarely gets much attention on the business shows like CNBC or Fox Business. But Tracey’s friend Ed has owned it for decades. Over the last 10 years, shares of Sherwin-Williams are up 437.8% with the dividends reinvested. That’s an annualized return of 18.3%.
$10,000 invested in Sherwin-Williams in 2013 would be worth $53,780 in 2023.
Does Sherwin-Williams still have further upside?
3. NVIDIA Corp. (NVDA Quick QuoteNVDA - Free Report)
NVIDIA was mentioned in the article as a holding by one of the rich retirees. If you had bought NVIDIA just 10 years ago, it would have gone up an astounding 11,786%.
But in 2022, shares sold off so it now has a 2-year return of “just” 117%. But NVIDIA is a leader in AI and revenue is expected to rise 59% this fiscal year to $43 billion from $26 billion last year. That’s impressive.
Is NVIDIA a good buy-and-hold stock for long-term investors?
4. Berkshire Hathaway (BRK.B Quick QuoteBRK.B - Free Report)
Berkshire Hathaway shares have been hitting new all-time highs in 2023. For investors looking for a way to track Buffett’s moves, including buy-and-hold, why not just buy shares of Berkshire’s B shares?
Shares of Berkshire Hathaway are up 218.9% over the last 10 years which beat the S&P 500 which was up just 170% during that same time. Over 20 years, Berkshire is up 600.9% versus the S&P 500 gaining 338.5%.
Should Berkshire Hathaway be on your short list?
5. Vanguard 500 Index Fund (VOO Quick QuoteVOO - Free Report)
Many of the rich retirees said they owned “indexes.” They didn’t say which index but the most common one is the S&P 500. The Vanguard 500 Index (VOO Quick QuoteVOO - Free Report) is one of the most common choices for those who want to own the S&P 500 in an ETF because it has a low expense ratio of just 0.04%.
Tracey owns shares of VOO in her own personal portfolio. It’s up 14.1% year-to-date but hasn’t yet hit another new all-time high this year. Buffett is a big fan of owning the indexes, like the VOO.
Should the VOO be the first step in growing your own million-dollar portfolio?
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